Sky Proposes Removal of WBTC from Ecosystem

The Sky team (formerly MakerDAO) has proposed excluding BitGo’s “wrapped” bitcoin, WBTC, from the list of assets available for collateral in the ecosystem, due to concerns about the token’s close ties with Justin Sun.

The removal of the tokenized version of bitcoin from the decentralized liquidity protocol SparkLend and Legacy Vault Types will occur in several stages through a voting system. The process is set to begin on September 26, according to the forum.

“The alleged ownership or control by Sun of the WBTC product through BitGlobal poses significant risks due to a troubling negative history regarding other custodial products and stablecoins associated with him,” the team asserts.

Users are advised to close WBTC Legacy Vaults and WBTC positions on SparkLend to avoid liquidations.

“Control over WBTC is expected to be transferred to a new enterprise led by BitGlobal by October 8, 2024, so we aim to begin risk mitigation of collateral by that time,” Sky representatives stated.

On SparkLend, WBTC is used as collateral for $73 million, with $127 million held in traditional vaults.

Earlier, the Sky community approved a proposal to halt new loans backed by WBTC.

The initiative arose in response to the decision by the issuer of “wrapped” bitcoin to expand the jurisdictions for storing the underlying asset to Singapore and Hong Kong as part of a partnership with the Tron Foundation-affiliated firm BiT Global.